* Pan-European index down 1.7 pct this week
* Italy's Leonardo plummets on guidance cut
* Insurer Allianz up after in-line results
* Euro zone earning beats 51 pct vs 72 pct on S&P500 (Adds details, updates prices)
MILAN, Nov 10 (Reuters) - European shares were set for their worst week in three months on Friday, as a slowdown in earnings growth spurred profit taking in a market that remains close to two-year highs.
Leonardo was the biggest loser on Friday, down 20 percent after the Italian defense contractor cut its guidance, while German insurance giant Allianz rose after in-line results.
The STOXX 600 fell 0.3 percent by 0950 GMT, weighed down by weaker industrials, one day after suffering its biggest one-day loss since the end of June.
The pan-European index was set to end the week down 1.7 percent, its biggest weekly loss since mid-August, but remains up 7.6 percent year to date.
Anthilia fund manager Giuseppe Sersale said some investors may be seeking to lock in profits before the year-end.
"There is nothing fundamentally catastrophic behind the apparent correction. Economic growth is strong and earnings are good even though not exceptional," he said.
According to Deutsche Bank estimates, EPS (earnings per share) growth for the STOXX 600 has slowed to 7.6 percent following double-digit growth in the previous two quarters.
Leonardo lost around one fifth of its value after the state-controlled Italian aerospace and defense company cut its 2017 targets, prompting a raft of broker downgrades on the stock.
JP Morgan downgraded the stock to neutral from overweight, predicting a period of uncertainty ahead and saying other issues may emerge as the scope of problems at its helicopters business was discovered only in the last few weeks.
Second biggest loser on the STOXX was Elekta, down 9.8 percent, after the Swedish Medical equipment company announcing a delay of a key product.
Among top gainers was Spie, up 4.8 percent after its earnings update.
Allianz was the biggest single boost to the STOXX, up 1.7 percent, as financials were in demand.
The German insurance giant posted a 17 percent decline in net profit and provided a slightly less rosy outlook for full year earnings as a spate of natural catastrophes weighed.
Traders said results at Allianz, which also announced a 2 billion euro share buyback plan, were in line with expectations and the new guidance was within an earlier range.
German engineering company Siemens fell 1.5 percent following a price target cut at Kepler that followed disappointing results on Thursday.
Its decline sent the euro STOXX 50 down 0.4 percent. The euro zone blue chip index was on track to post a weekly fall following 10 straight weeks of gains.
Around 74 percent of companies on the MSCI EMU index have reported results with earnings beats at 51 percent, according to Thomson Reuters data.
Earnings beats on the broader MSCI Europe index are at 55 percent, while in the U.S. S&P 500 beats are at 72 percent.
(Reporting by Danilo Masoni, editing by Ed Osmond)